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Decarbonization of ASEAN energy systems:
Optimum technology selection model analysis up to 2060

31.05.2022
The 5th IEEJ Webinar for the World
Yuji MIZUNO, Ph.D. Soichi MORIMOTO Yuji MATSUO, Ph.D.
Kei SHIMOGORI Yoshiaki Shibata Toshiyuki Sakamoto
The Institute of Energy Economics, Japan (IEEJ)
Shigeru KIMURA Prof. Jun ARIMA
Economic Research Institute for ASEAN and East Asia (ERIA)

Takashi OTSUKI, Ph.D.

Outline│ Methodology│ Results for ASEAN

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│ Conclusions

1

Methodology

IEEJ-NE_ASEAN model│ IEEJ-NE (NE: New Earth) is a linear programming model that simulates the cost-optimal
deployment of energy technologies under technical constraints.
│ It encompasses the total energy system. Power supply and demand are temporally
disaggregated to incorporate the costs for integrating variable renewable energy.

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Modeled energy system

2Methodology

Modeling of electricity supply and demand│ Temporally disaggregated (2910 time slices per year) to capture the variability of renewableenergy and system integration cost.
│ Co-firing at both existing and newly installed power plants are explicitly modeled.

Modeled technologies
Coal-fired

Geothermal

GWh per hour
70

Simulated electricity balance for a month in a country

60
50

Solar PV
Coal-Ammonia
co-firing (20%) Onshore wind
IGCC

Offshore windGas-fired

Biomass-fired

Gas combined

Nuclear

40

30
20
10
0

-10
-20

Other use
Inter-regional transmission
Water electrolysis
NAS battery
Li-ion battery
Pumped hydroCurtailment
Offshore wind
Onshore wind grade 3
Onshore wind grade 2
Onshore wind grade 1
Solar PV
Fuel cell
H2-firedOil
Gas CCGas steam
IGCC
Coal-fired
Biomass
Geothermal
Small hydroLarge hydroNuclearFinal consumption

GWh

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Hydrogen-fired

Gas-Hydrogenco-firing （H2 Ammonia-fired
20%, 40%,
Pumped hydro60%, 80%)
Li-ion battery
Hydro

100
80

Simulated stored energy for a month in a country

PumpedLi-ion battery
NAS battery

60

Hydrogen40
20
0

H2 tank
3

Methodology

Model overview
Regional division

10 ASEAN countries (10 nodes)

Time period

2017-2060 with representative years of 2017, 2030, 2040, 2050 and 2060

Objective function

Discounted total system cost for ASEAN

Discount rate

8%Temporal resolution

2190 time slices (4-hourly resolution) per year for electricity supply and demandbalance

Number of technologies

350+ technologies

End-use sector

Industry:
Iron & Steel, Cement, Chemicals, Paper & pulp, Other industries
Transport:
Light-duty vehicle, Bus & truck, Rail, Aviation, Navigation, Other transport
Residential:
Light and appliances, Space cooling, Water heating, Kitchen

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Commercial:
Light and appliances, Space cooling，Water heating & Kitchen
Other:
Agricultural and other energy demand
4Methodology

Selected low-carbon technologies in the model
Renewables

Solar PV, Onshore wind, Offshore wind, Hydro, Geothermal, biomass

NuclearLight water reactor

CCUS

CO2 capture:
Chemical absorption, Physical absorption, Direct air capture
CO2 utilization:
Methane synthesis, FT liquid fuel synthesis
CO2 storage:
Geological storage

HydrogenSupply:Electrolysis, Coal gasification, Methane reforming, H2 separation from Ammonia,
H2 trade among ASEAN countries, H2 imports from non-ASEAN countries
Consumption:
H2 turbine, Natural gas-H2 co-firing, FCEV, H2 based DRI+EAF, Fuel cell ship,
H2 aviation, H2 heat for industries, Fuel synthesis (methane, FT liquid fuel, ammonia)

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Ammonia

Supply:Ammonia synthesis, NH3 trade among ASEAN countries,
NH3 imports from non-ASEAN countries
Consumption:
Ammonia turbine, Coal-ammonia co-firing, H2 separation

Negativeemissions

Direct air capture with CCS (DACCS), Biomass-fired power generation with CCS (BECCS)

5

Assumption

Case settings│ Baseline does not assume any emission constraints by 2060.
│ CN2050/2060 assumes energy-related CO2 emission constraints by country and achieves net zeroCO2 emissions with natural carbon sink by 2060 in ASEAN.
•

CN2050/2060_Innovation cases are for evaluating the impact of technological innovation in
the CN2050/2060. (sensitivity analysis 1)•

CN2050/2060_Stringent2030 puts more stringent emission constraints by 2030 in theCN2050/2060. The emission in 2030 is consistent with IEA SDS. (sensitivity analysis 2)│ CN2050/2060_w/oCarbonSink assumes net zero energy-related CO2 emissions by 2050 in BRN
and SGP and by 2060 in the rest of the countries. This is the case we initially assumed.
Energy-related CO2 emission constraints in ASEAN
MtCO2
6000

Note: CN2050/2060_w/oCarbonSink is the case we initiallyassumed. We had discussions with ASEAN countries based on
the initial results, and developed CN2050/2060 reflecting eachcountry’s comments.

Baseline

5000
CN2050/2060_w/oCarbonSink
4000

CN2050/2060_Stringent2030
3000
CN2050/2060
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2000
1000
0
2017

2030

2040

2050

2060

6

Assumption

Country emission reduction targets in the CN2050/2060│ The CN2050/2060 reflects nationally declared CN target years and considers
carbon sinks in Indonesia, Malaysia, Myanmar, Thailand, and Vietnam.
Energy-related CO2 emission reduction targets by country in the CN2050/2060

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Country

Energy-related
CO2 emissions
CN target year
reduction
target from2017

Brunei2050

Cambodia

2050

Indonesia

2060

Laos

2050

Malaysia

2050

Myanmar

2060

Philippines

2060

Singapore

2050

Thailand

2050

Vietnam

2050

Note

Target year: No CN target. Set to 2050 considered income level
Sink: Not considered
Target year: 2050 CN declaration (CAA member country)
100%
Sink: Not considered
Target year: 2060 CN declaration
50% Sink: The 2050 value of the LTS LCCP scenario. Although original target
is calculated to be 39%, set to 50% as the minimum requirement
Target year: 2050 CN declaration (CAA member country)
100%
Sink: Not considered
Target year: Reffered to 2050 CN by prime minister
50% Sink: The 2016 value of the inventory. Although original target is
calculated to be -14%, set to 50% as the minimum requirement
Target year: 2060 CN (requested by Myanmar)
60%
Sink: The 2030 target of the unconditional NDC
Target year: No CN target. Set to 2060
100%
Sink: Not considered
Target year: No CN target. Set to 2050 considered income level
100%
Sink: Not considered
Target year: 2050 CN (requested by Thailand)50%
Sink: Use values provided by Thailand
Target year: 2050 CN declaration70%
Sink: The 2030 target of the unconditional NDC
100%

7

Assumption

Key assumptions│ ASEAN Power Grid•

Int’l grid extension is constrained with currently planned capacities, totaling 55GW.

│ Hydrogen imports from non-ASEAN countries•

Volume: max. 203Mtoe/year in 2040, 540Mtoe in 2050, 638Mtoe in 2060. The volume
after 2050 is equivalent to 30% of baseline total primary energy.

•

Price: 30 cent per Nm3-H2 in 2030, 20 cent in 2050 and 17.5 cent in 2060 based onJapanese Government’s long-term hydrogen supply chain target.

│ Annual CO2 storage capacity•

Max. 687MtCO2/year in 2040, 1138MtCO2 in 2050 and 1610MtCO2 in 2060•

The capacity is equivalent to 25% of baseline CO2 emissions in 2050, 30% in 2060.

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│ Biofuel supply potential for road transport grows in proportion to road transport demand.

8

Assumption

Power generation cost
│ Assumptions for power generation cost are obtained from publicly available reports
or ASEAN countries.
Assumed levelized Cost of Electricity (LCOE)
Indonesia, 2050
cent/kWh

Other OPEX
Fuel

13.8

11.9
10.7

10.0
7.2
4.8

7.0

6.5
4.6

CAPEX (LiB)

11.0

10.1
8.3

2.6

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11.5

CAPEX
7.9

7.3
5.3

5.8

5.9

4.1 3.5

1.1• Hydrogen price: 20 cent/Nm3-H2• Ammonia price: 16 cent/Nm3-H2• Capacity factor: 40% for hydro, 80% for geothermal, 15% for solar PV, 20%
for onshore wind, 30% for offshore wind, 80% for nuclear, 60% for the restof the technologies(source) Danish Energy Agency (2021), etc.

9Assumption

Cost reduction of variable renewables and battery│ Cost of solar PV, wind turbines and battery are assumed to largely decrease by 2060•

Note that pumped hydro, Li-ion battery and compressed hydrogen tank are modeled.

•

Capacity of pumped hydro is exogenous in this study, while Li-ion battery and hydrogentank are determined endogenously

Solar PV capital costIndonesia

Li-ion battery cost
ASEAN

USD/kW

USD/kWh

790

370

560
485
410

208
182

382

156

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2017

2030

2040

2050

(source) Danish Energy Agency (2021); NREL (2020)

2060

2020

2030

2040

2050

135

2060

10

Assumption

Solar PV potential│ Total 3513 GW in ASEAN, estimated by the IEEJ based on GIS data
│ Solar PV potential in Indonesia is divided into “Java & Sumatra” and “other” to reflect
regional imbalance of electricity demand and renewable energy•

Solar PV in the “other” region is assumed for hydrogen production│ Potential in Malaysia is also divided into “peninsula” and “other” in this model
Solar PV potential assumption
GW

1493

Other
region
1014

524
350

Java &
Sumatra
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480

2

Other region
Peninsula

287

280

291

195
89

117
78

2

11

Assumption

Wind power potential│ Assumed onshore wind potential is 313GW and offshore wind is 1241GW in ASEAN,
estimated by the IEEJ based on GIS data
│ Onshore wind and offshore wind in Indonesia is divided into “Java & Sumatra” and “otherregion” to reflect regional imbalance of demand and resources•Wind power in the “other region” is assumed for hydrogen production

Wind power potential
GW
668

Offshore wind
Onshore wind
502

576
435

244

224

74

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50
0

16

0

Note: Potential data will be revised based on comments from each country

1

92

0

70

66

12

Outline│ Methodology│ Results for ASEAN•

Energy mix for decarbonizing ASEAN by 2060•

Sensitivity analysis 1: Technological innovation•

Sensitivity analysis 2: Strengthen CO2 emissions constraints in 2030

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│ Conclusions

13

Results for ASEAN

Sectoral CO2 emissions│ End-use emissions reduction, combined with negative emission technologies1, is estimated to
be a cost-efficient strategy for ASEAN carbon neutrality.
│ Power sector is almost decarbonized by 2040, while the CO2 from the transport, especiallybus and truck, remain in the CN cases because of high costs of alternative vehicles.
Sectoral energy-related CO2 emissions in ASEAN
Mt O
5Other including

S

Other end use
ransport
Industry

lectricity

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aseline

1 BECCS and DACCS

5

5

5

5

nergy related

5
w o arbonSin

O emissions

End-use CO2 emissions
are offset by negativeemission technologies
and natural carbon sink.

14

Results for ASEAN

Primary energy supply│ A wide range of technologies, including renewables, nuclear, CCS and import of hydrogenand ammonia, are necessary for deep decarbonization.
│ Zero emission energies together contribute to 56% of primary energy in 2060 in theCN2050/2060, and 65% in the CN2050/2060_w/oCarbonSink.
Primary energy supply in ASEAN
Mtoe
5

mmoniaydrogeniomass
Wind

5

Solar
Geothermal
ydro

5

Oil

5

5

5

atural gas
oal

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uclearaseline1 NETs = Negative Emissions Technologies

55w o arbonSin

Fossil fuels include non-energy use. CO2 from fossil fuel combustionin 2060 in CN2050/2060 is offset by NETs and natural carbon sink.

15

Results for ASEAN

Final energy consumption│ Energy saving and electrification are core strategies for decarbonizing end-use sectors.
│ Electricity becomes the largest end-use energy source by 2050.

Final energy consumption in ASEAN
Mtoe
iomassydrogenlectricity
Synthetic methane
atural gas non energy
atural gas
Synthetic li uid fuelOil non energy
Oiloal
Share of electricity

5

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aseline

5

5

5

5

5

5
w o arbonSin

16

Results for ASEAN

Power generation│ Renewables become the main power source in the CN cases.
│ Hydrogen and ammonia, including co-firing, are also projected to be a part of the power
generation mix for net zero emissions by 2060.

Power generation in ASEAN
TWh

Share ofrenewables

10000
54%

8000

56%
63%

62%

6000

52%

49%

4000

Ammonia
HydrogenBiomass
Offshore wind
Onshore wind
Solar PV

2000

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Baseline
Ammonia
Solar PV
Coal-Biomass

CN2050/2060
Hydrogen
Geothermal
Coal-Ammonia

Biomass
Hydro
Coal

2060

2050

2040

2030

2017

2060

2050

2040

2030

2017

2060

2050

2040

2030

2017

0

Geothermal
Hydro
Gas-hydrogen
Nuclear

CN2050/2060_w/oCarbonSink
Offshore wind
Gas-Hydrogen
NuclearOnshore windGas

17

Results for ASEAN

Transition from fossil fuels to NH3 & H2 power generation│ In the short- to medium-term, such as 2030~40, efficient gas-fired plants is estimated tocontribute to curbing CO2 emissions from power generation.
│ In the longer-term, gas-fired with CCUS, co-firing with ammonia or hydrogen, and 100%
ammonia and hydrogen power would be candidates.
Power generation from coal, gas, ammonia and hydrogen in ASEAN
Shift to 100% ammonia
or hydrogen power

TWh
4000

3000

• Co-firing at existingcoal-fired and gasfired plants• Gas-fired with CCUS
Installing

2000 efficient gasfired plants

1000

CN2050/2060

CN2050/2060_w/oCarbonSink

2060

2050

2040

2030

2017

2060

2050

2040

2030

2017

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0

HydrogenAmmonia
100% hydrogen at gas-fired plant
Gas-Hydrogen co-firing CCUS
Gas-Hydrogen co-firing
Gas CCUS
Gas
Coal-Biomass co-firing CCUS
Coal-Biomass co-firing
Coal-Ammonia co-firing CCUS
Coal-Ammonia co-firing
Coal CCUS
Coal

18

Results for ASEAN

Road transport vehicle│ Passenger light-duty vehicles are projected to be largely electrified by 2050.
│ Oil consumption remains in bus and truck transport in the CN cases mainly due to high pricefor alternative vehicle technologies.

Travel distance by vehicle technology in ASEAN
Gvkm = 109 vehicle-km
4,000

Passenger light-duty vehicle

FCEV
BEV
CNG ICEV+HEV
Biofuel ICEV+HEV+PHEV
Oil HEV+PHEV
Oil ICEV

3,000

2,000
1,000
0
Bus and truck

4,000

3,000
2,000
1,000

Baseline

CN2050/2060

Note: biofuel includes bioethanol and biodiesel mixed with petroleum fuel.

2060

2050

2040

2030

2017

2060

2050

2040

2030

2017

2060

2050

2040

2030

2017

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0

FCEV
BEV
CNG ICEV+HEV
Biofuel ICEV+HEVOil HEV
Oil ICEV

CN2050/2060_w/oCarbonSink

19

Results for ASEAN

Costs for reducing CO2│ Marginal abatement cost, which represent the intensity of decarbonization policies, would be
348 USD per tCO2 in the CN2050/2060, and 651 USD in the CN2050/2060_w/oCarbonSink,
implying economic challenges for net zero emissions.
│ Additional annual cost from the Baseline to the CN2050/2060 and theCN2050/2060_w/oCarbonSink is estimated to be about 3.6% and 5.2% of ASEAN GDP in
2060.
Marginal CO2 abatement cost (MAC)
ASEAN weighted average
S

Additional annual cost
ASEAN totalt O

Share of G P
5
5
5

5

w o arbonSin

5

5.

w o arbonSin

5

5

.
.
.

.

ERIA/IEEJ © 2022.

Note: The costs presented here do not include costs to enhance emissions reductions in the LULUCF sector.

20

Outline│ Methodology│ Results for ASEAN•

Energy mix for decarbonizing ASEAN by 2060•

Sensitivity analysis 1: Technological innovation•

Sensitivity analysis 2: Strengthen CO2 emissions constraints in 2030

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│ Conclusions

21

Sensitivity analysis 1

Impacts of technology innovation│ Five technology innovation cases (PowerInov, CCSInov, H2Inov, DemInov and Combo) toinvestigate their impacts on energy mix and mitigation costs.

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Case

CN year

Key technology assumptions

CN2050/2060

2060• Reference technology cost
• International power grid extension is constrained by planned ASEAN
Power Grid capacity• CO2 storage up to 1.6GtCO2/year in 2060

PowerInov

2060• Cost reduction of Li-ion battery (-25% in 2040 and -50% after 2050, fromthe reference level) and international grid extension• No upper limit for international power grid extension• Large-scale electricity exports from Myanmar to Thailand

CCSInov

2060• Cost reduction of DAC (-25% in 2040 and -50% after 2050)• CO2 storage up to 2.7GtCO2/year in 2060

H2Inov

2060• Cost reduction of coal gasification, methane reforming and electrolyzer (25% in 2040 and -50% after 2050)• Cost reduction of hydrogen consumption: H2 based DRI-EAF and FC ship(-25% in 2040 and -50% after 2050), FCEV (comparable to hybrid electricvehicle price in 2060)

DemInov

2060• Cost reduction of advanced end-use technologies (-50% in and after 2040)

Combo

2060

• Combination of all the above

DRI-EAF: Direct Reduced Iron-Electric Arc Furnace, FC: Fuel Cell, FCEV: Fuel Cell Electric Vehicle

22

Sensitivity analysis 1

Innovation and mitigation costs│ Technology innovation, as well as ASEAN energy cooperation such as APG, significantly
reduce marginal abatement costs and additional annual costs.
│ Future research & development and cooperation is crucial for realizing net zero emissions.
Marginal CO2 abatement cost (MAC)

Additional annual cost

Range of country marginal cost in 2060

ASEAN total
Share of S

G P
5PowerInov
Inov
SInov
emInov

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ombo

23

Outline│ Methodology│ Results for ASEAN•

Energy mix for decarbonizing ASEAN by 2060•

Sensitivity analysis 1: Technological innovation•

Sensitivity analysis 2: Strengthen CO2 emissions constraints in 2030

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│ Conclusions

24Sensitivity analysis 2

Impacts of strengthening short-term emission constraints│ As for the power generation mix, solar PV increases while gas-fired decreases in 2030 in
the CN2050/2060_Stringent2030 by strengthening short-term emission constraints.
│ MAC in 2030 increases significantly to 300 USD/tCO2, implying the cost hurdle to achieve
short-term emission reductions.
Marginal CO2 abatement cost (MAC)
ASEAN weighted average

Power generation in ASEANS

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5

5

5

Wh

mmoniaydrogeniomassOffshore wind
Onshore wind
Solar PV
Geothermalydro
Gas ydrogenGas
oal iomass
oal mmonia
oaluclear

t O
5

5

5

Stringent

55StringentNote: The value of the objective function is larger in theCN2050/2060_Stringent2030 than in the CN2050/2060.

25

Outline│ Methodology│ Results for ASEAN

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│ Conclusions

26

Conclusions (1)│ Energy saving and electrification in end-use sectors, combined with low-carbon power
supply, would be core strategies for decarbonizing ASEAN energy systems.
Not only VRE, but also other carbon-free technologies including hydro, geothermal,
biomass, and nuclear can contribute to carbon neutrality.

•

CO2-free hydrogen supply, CCS, and negative emission technologies are also
important.

uring transition periods, various inds of “low-carbon” technologies can reduce
emissions effectively.

O2•

In the power sector, fuel switching from coal to natural gas, deployment of more
efficient turbines, co-firing with hydrogen or ammonia, as well as fossil-fuel fired power
generation with CCS can contribute to following paths towards deep decarbonization.

•

Affordable technologies are likely to be introduced in the mid-term. Deployment of more
expensive technologies would be required in the last stage of complete
decarbonization.

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│

•

27

Conclusions (2)│ Simulation results would imply significant economic challenges associated withdecarbonization.
•

Mitigation costs and energy prices may increase in the CN cases.

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│ Cost reduction and international cooperation would be the key to achieve carbon neutrality
in an affordable manner.
•

Technology innovation and scale merits are essential for cost reduction.

•

Regional cooperation would contribute to more efficient deployment of low carbon
technologies.

•

Future research & development, in cooperation with advanced economies, is crucial forachieving carbon neutrality in the long term.

Contact:report@tky.ieej.or.jp28